How Does HST Affect My New Condo Closing?

The vast majority of real estate developers in Ontario
include the HST in the sale price of new condo when they release their
new developments for sale to the general public -- but, NOT thte HST Rebate protion of the HST. This is because the Purchase Agreement is written to assume that the purchaser will be using the new construction property as their primary residence and therefore, will be credited the amount for the HST New Housing Rebate on final closing and not owe anything anyway. In the many pages of the legal
document known as the Agreement of Purchase and Sale that the purchaser signed with the builder, one of the terms outlined is a statement of confirmation that the purchaser
will move into the new condo as their primary residence. In this case, the right to claim the HST
rebate has been assigned from the purchaser to the builder and the builder covers the HST Rebate for a short time on closing until they adjust it with CRA. Essentially, the owner-occupier purchaser has
no responsibility for the portion of HST due on closing for the new condo as it
will be used as a primary residence. But, what happens to the investor on closing?

What happens in the case that I decide to not move into my
new condo investment?

Note that condo investors wrongfully claiming their new
condos as their primary residence are being audited these days. CRA estimates that about 70% of new build
primary residence claims are false. They
have recently embarked on a new mission to audit for HST rebates but importantly, CRA uses the information that they collect through the HST Rebate Programs to also audit for
capital gains (sometimes demanding tax be paid on a new construction property as business income instead of
a capital gain). This past April, a CRA
spokesperson reported to the Toronto Star that CRA is focusing on real estate as
there is much unclaimed return on investment and HST fraud as a result of the
condo boom. What is our advice? Plan your real estate investments ahead of
time. Understand the HST rules and
regulations and stay off CRA’s delinquent list.

Call HST Relief: Rebates and Loans for a free consultation
to help you understand these rules and regulations. We offer 2 services that aim to support condo
investors:

We provide loans for HST so that you aren’t
tempted to wrongfully claim a new condo as your primary residence. You don’t want to be flagged and audited by
CRA. Worse, you don't want to receive a letter in the mail from CRA clawing back the HST Rebate because they have discovered that you do not qualify.

We provide the service of filing your HST Rebate
to ensure that you reclaim the HST you paid on closing for your new investment
property.

There are several considerations that affect your
eligibility in reclaiming the HST through CRA’s New Residential Rental Rebate
Program. Make sure you understand the
rules before closing. Some of the issues
to watch out for are:

When your condo will be occupied (during
occupancy period or after closing)

Who will occupy your condo – not all blood
relatives may occupy your new condo as a primary residence without HST
implications

Whether or not all people on title will occupy
the unit as their primary residence

Whether or not you purchased your condo on
assignment before closing

When you plan to sell the condo as CRA reserves
the right to claw back the HST Rebate that was issued to you

Call us for specific advice that pertains to your particular
condo purchasing scenario. It should be
noted that these same principles apply to purchasing new build houses,
townhomes, duplexes and condos all across Ontario. We can be reached at 1.866.832.1990.

Is there HST payback on my investment property?

I heard I can get some of the money I paid for the HST on my new investment property as a sort of payback. How can I get this HST back?

Answers

By HST Relief (Admin)May 2, 2016 1:16 PM

Yes, if you are purchasing a new construction property to be used as an investment, then you will both 1) owe a portion of the HST on final closing and 2) be able to get this money back by filing for a HST rebate after final closing.

Our company, HST Relief: Rebates & Loans, offers 2 main services:

1) We lend the amount of HST due on closing as a short-term loan. There are a lot of closing costs due at the time of closing (which can include development fees, levies, land transfer tax and lawyer's fees) and so, having a loan for the $17,000 - $29,000 in HST due on closing is very helpful for some investors. The day after closing, we will file for the HST rebate and the money coming back to you will go to make the loan whole.

2) We also offer a straight rebate filing service to get your HST back.

Give us a call at 1.866.832.1990 or email us with additional questions at: info@hstrelief.ca

HST for chinese condo investors

I heard that Chinese investors are exempt from having to pay land transfer tax. Do Chinese investors have to pay HST on new homes and condos?

Answers

By HST Relief (Admin)March 18, 2016 10:40 AM

Yes, everyone who is not living in the new construction property (whether a condo, house or townhome) should expect to pay a portion of the HST upon final closing and registration. The good news is that foreign investors do qualify for the HST rebate. Give us a call to put together your rebate filing and reclaim your HST in the amount of $17,000 - $29,000.

Is the full 13% of HST due on closing for my new construction investment property?

How much should I expect to have to close my new construction investment property? Is it the full 13% in Harmonized Sales Tax due on closing?

Answers

By HST Relief (Admin)February 29, 2016 1:05 PM

Hi Robert,

No. The full 13% in HST is never all due on closing of the new construction property. Part of the HST is built into the purchase price and part of the HST is issued as the New Housing Rebate. Now, if you are using the property as an investment condo, then you will have to pay a portion of the HST on the closing date. This portion is the HST Rebate calculation amount - which means, you can get this money back through the rebate program. If you are going to be using it as your primary residence, then the builder will credit you the HST Rebate on closing and you should owe nothing in addition to your closing costs and deposit amounts.

For more information on how HST works for your new construction property, give us a call at 1.866.832.1990 or info@hstrelief.ca

How does HST work across the suburbs and in the Greater Toronto Area

My buddy purchased a preconstruction condo in downtown Toronto and has been talking about getting together extra cash to cover the HST that will be due on closing. My question is this - do I have to worry about HST for a new house I bought in Stoney Creek in a suburban development? This purchase is nothing like the Toronto condo market, so I am assuming I won't have to pay HST. It would be great to have you confirm this. Thanks in advance.

Answers

By HST Relief (Admin)February 24, 2016 2:54 PM

Good question. It seems that HST if often talked about in the context of new condos, since they make up the bulk of new build properties sold as preconstruction to investors. However, HST is applied with the same rules across Ontario for ALL new build homes purchased from a builder. In other words, you should be prepared to pay HST on your new construction house or townhome if you are not going to be moving in as your primary residence.

For more specific answers that pertain to your particular situation, please call or email one of our agents at: 1.866.832.1990 info@hstrelief.ca

Our services include lending the HST amount due on closing and filing your HST rebate application with CRA to get your money back!

Help with HST and condo investing

This is wonderful information. I appreciate the explanation and the tips. I will be referring my clients to speak with the agents at HST Relief and encouraging them to use your loan and filing services.

I wanted to note, generally, as a Broker of Record for my own brokerage here in the Toronto market, that the Condo market is as healthy as ever. In winter 2016, the Canadian dollar is dropping to an 11 year low and this only means amazing strength for the Canadian real estate and condo market. This is particularly good for foreign investors (it was great to read here that HST Relief can help foreign investors recover some tax they pay on investment condos! I have several of these clients and will be sending them along to you). It's not just foreign investors that are benefitting from the current economic situation. Since stock markets are down over 15%, the best investment for Canadians' cash is also the real estate market. Interest rates are so low on mortgages that buying properties is free money.